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  1. Phil

    Good morning! 

    That last oil entry was a bust (now $95.75) and, of course, tomorrow is inventories but the same weather that kept people out of stores may have kept them out of gas stations so I'm not expecting a bullish one.  Still, we don't touch the .25 lines this early in the cycle and they are clearly going for $96 on /CL so we better let them and then see what happens.  $95.75 is about where we pressed our USOs yesterday and we're back to 10 so we can roll up and do it again if we have to.  

    In general, we're looking strong again and, once the S&P is back over the 1,560 line – there's nothing to do BUT be bullish for the duration.  

    Case-Shiller is going like gangbusters, with the 20-City Composite up 8.1% from last year.  Keep in mind that means, if you buy a $300,000 home and put $60,000 down on a 4% mortgage, your monthly payments are about $1,500 and, at the end of the year, your home is worth $24,000 more than you paid for it.  THAT is how you drive people back to the housing market at a rapid pace because that buyer tells two friends and they tell two friends and so on and so on….

    Don't forget, regular people can't play stocks, options, commodities futures… to hedge against inflation – for most people,  their home is their only investment and, once you string together a couple of 8% years and people begin to refinance their homes and buy nice cars that they show off to their family and neighbors as they make fun of them for being too scared to buy a home in 2010 or 2011 – that's how you get that stampede into housing going.

    Also, people who are thinking of buying homes tend to browse all the time and when they see homes they like rising in prices and getting snapped up quicker and quicker – it motivates them to get on board before the train leaves the station.  This is a great formula for building a sustainable base under our rally so we'll watch those builder reports very closely but it's still very early innings if we're going to have a proper housing recovery, of course.  

    As you can see from the above chart – we're still so far from even that 8% a year is nothing so it's our game to lose at this point – it would take a pretty good shock to derail the rally when you consider there are still so many people trapped in underwater mortgages (keeping homes off the market) and so many people who have put off moving for years as we work through the crisis but are getting ready now and so many households that were not created (recent college grads mostly) as that market fell apart and, as noted above, now the own vs. rent calculation has shifted back to own in a big way – a perfect recipe to continue the rally in housing for the foreseeable future.  

    At the open: Dow +0.42% to 14509. S&P +0.46% to 1559. Nasdaq +0.44% to 3250.

    Treasurys: 30-year -0.29%. 10-yr -0.17%. 5-yr -0.08%.

    Commodities: Crude +0.96% to $95.72. Gold -0.51% to $1598.35.

    Currencies: Euro +0.07% vs. dollar. Yen +0.21%. Pound +0.17%.

    10:00 Consumer Confidence
    10:00 State Street Investor Confidence Index
    10:00 Richmond Fed Mfg.
    10:00 New Home Sales
    1:00 PM Results of $35B, 2-Year Note Auction
     

    Market preview: Stocks look poised to open higher after a batch of better-than-expected economic reports point to an ongoing recovery. Durable goods orders climbed 5.7% in February, and the January Case-Shiller home price index soared to its biggest annual increase in six years. European bourses are mostly higher. Still ahead: consumer confidence, new home sales, Richmond Fed.

    "At no point is it possible to bail-in depositors below €100K, now or in the future," Reuters reports an EU Commission statement as saying (never mind this is precisely what was attempted in Cyprus last week). It's not our job to evaluate Dijsselbloem's comments on Cyprus, the EU adds. "Dijsselbloem was wrong," says the ECB's Benoit Coeure. "Cyprus isn't a model."

    With traditional housing inventory shrinking to scarce levels, housing bears hang their hats on the so-called "shadow inventory," but that too is disappearing with CoreLogic reporting this potential supply off 18% Y/Y in January to 2.2M units vs. about 2M existing homes currently available for sale. 

    Friend of the Devil:  Warren Buffett (BRK.B) becomes a long-term investor in Goldman Sachs, agreeing to amend his warrant agreement to accept shares for any difference between the $115 exercise price and the value of the stock on Oct. 1, 2013. Buffett: "We intend to hold a significant investment in Goldman Sachs." GS +1.4% premarket. (PR)

    Opinions on retail sales are differing with today's Redbook report on chain store sales indicating consumers are stocking up on spring goods while ISCS-Goldman warned earlier that a batch of winter storms is keeping sales of spring goods lower. The contradicting views follows a familiar path in retail with some analysts seeing the glass half-full (consumer confidence up) and others half-empty (paychecks lower). The tale of the tape shows retail mildly underperforming broad market indexes: S&P Retail ETF (XRT) +7.6% YTD vs. S&P 500 +8.8%.

    Royal Dutch Shell (RDS.ARDS.B) says it received approvalfrom the Chinese government for its first shale gas production-sharing contract in China. Shell plans to spend $1B exploring, developing and producing shale gas with partner China National Petroleum in the Fushun-Yongchuan block in the Sichuan basin. 

    As gold miner (GDX) prices fall, company insiders are buying at their fastest pace in years, according to INK Research, which sees seven precious metals stocks on the Toronto Exchange with buyers for every one with sellers. "That is the type of insider buying we saw in the broad market during the height of the great financial crisis."

    When Elon Musk tweets, do people listen? Shares of Tesla Motors (TSLA) are still holding up even though the electric vehicle automaker's CEO tipped off a potential secondary offering of stock yesterday. Though effusive confidence by a CEO is a nice touch, some traders are warning that Tesla's stock price is looking even riskier with the latest development. Look for Elon Musk to give some enticing details on development of the Model X to help smooth over any news of a capital raise. TSLA +0.2% premarket to $37.60.

    "The big opportunity over the next two years is the low-end phone market," Gene Munster tells Bloomberg, expecting Apple's (AAPL) earnings growth to return in H2 and reiterating his Buy rating on the stock. Munster sees just a modest increase in the dividend – from $10.60 to $14 – and no bump in the buyback. Shares +0.3% premarket.

    Apple (AAPL -0.2%) roundup: 1) Oppenheimer is cuttingFY13 and FY14 estimates. "Much of the revision appears built into investor expectations … However, we also don't see much of a [near-term] positive catalyst until we get closer to the product cycle or get more clarity on Apple's cash intentions." 2) Apple reportedly plans to triple the number of Apple Premium Reseller stores in India to ~200 by 2015. The report comes as Apple's Indian sales start to accelerate. 3) The Next Web takes a look at the complex technologies used by acquisition target WiFiSLAM to master indoor mapping/positioning. (Gene Munster)



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Zero Hedge

China Establishes World's Largest Physical Gold Fund

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

While many eagerly await the day when China will finally reveal its latest official gold holdings, a number which when made public will be orders of magnitude higher than its last 2009 disclosure of just over 1,000 tons, or less even than Russia, China continues to plough ahead with agreements and arrangements to obtain even more gold in the coming years.

Exhibit A: two weeks ago, Xinhua reported that China National Gold Group Corporation announced it has signed an agreement with Russian gold miner Polyus Gold to deepen ties in go...



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Phil's Favorites

Three and a half years since the last 10% correction

If the S&P 500 does not have a 5% correction this year, it will be the first time in 20 years. And it's been 3.6 years since the last 10% correction. And trailing and forward PEs are relatively high. In the low interest rate environment, higher-than-normal stock prices are the new normal, but how much higher? And should we expect a reset with the Fed's plans to ease the interest rate higher?

Three and a half years since the last 10% correction

Courtesy of 

Deutsche Bank is out with a piece of research this weekend mentioning the fact that the S&P 500 has just broken a record high thanks to a median trailing PE ratio of over 18 – the highest we’ve seen since...



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Chart School

eToro Review

Courtesy of Declan.

763 followers 76 copiers A solid jump in both followers and copiers from the start of the month. This was in large part to my top-10 ranking in their People screener. Having said that, last week finished very poorly for me. Overtraded and wa...

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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Kimble Charting Solutions

King Dollar & Crude Oil reversing ST trends, says Joe Friday

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

King Dollar and Crude Oil have been have had little correlation over the past year, as each has traded in pretty much opposite directions.

Over the past 9 months King Dollar has had a historical rally and the opposite is true for Crude Oil.

Of late Crude hit its 23% Fibonacci resistance line, based upon last summers weekly closing highs and weekly closing low on 3/13/15.

Joe Friday just the facts….Crude oil is making an attempt to break short-term steep rising support this week and King Dollar is attempting to break short-term steep falling resistance.

Crude oil just experienced its 7th largest 2-month rally in its...



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Pharmboy

Big Pharma's Business Model is Changing

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Understanding the new normal of a business model is key to the success of any company.  The managment of companies need to adapt to the changing demand, but first they must recognize what changes are taking place.  Big Pharma's business model is changing rapidly, and much like the airline industry, there will be but a handful of pharma companies left at the end of this path.

Most Big Pharma companies have traditionally done everything from research and development (R&D) through to commercialisation themselves. Research was proprietary, and diseases were cherry picked on the back of academic research that was done using NIH grants.  This was in the heyday of research, where multiple companies had drugs for the same target (Mevocor, Zocor, Crestor, Lipitor), and could reap the rewards on multiple scales.  However, in the c...



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Sabrient

Sector Detector: Bullish technical picture appears to trump cautious fundamentals

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Sabrient Systems and Gradient Analytics

By Scott Martindale

Stocks closed last week on a strong note, with the S&P 500 notching a new high, despite lackluster economic data and growth. I have been suggesting in previous articles that stocks appeared to be coiling for a significant move but that the ingredients were not yet in place for either a major breakout or a corrective selloff. However, bulls appear to be losing patience awaiting their next definitive catalyst, and the higher-likelihood upside move may now be underway. Yet despite the bullish technical picture, this week’s fundamentals-based Outlook rankings look even more defensive.

In this weekly update, I give ...



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OpTrader

Swing trading portfolio - week of May 18th, 2015

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Digital Currencies

Nasdaq's bitcoin plan will provide a real test of bitcoin hype

 

Nasdaq's bitcoin plan will provide a real test of bitcoin hype

By 

Excerpt:

Bitcoin, the virtual digital currency, has been called the future of banking, a dangerous fad, and almost everything in between, but we're finally about to get some solid data to help settle the debate.

On Monday, the Nasdaq (NDAQ) stock exchange said it would ...



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Market Shadows

Kimble Charts: US Dollar

Which way from here?

Chris Kimble likes the idea of shorting the US dollar if it bounces higher. Phil's likes the dollar better long here. These views are not inconsistent, actually, the dollar could bounce and drop again. We'll be watching. 

 

Phil writes:  If the Fed begins to tighten OR if Greece defaults OR if China begins to fall apart OR if Japan begins to unwind, then the Dollar could move 10% higher.  Without any of those things happening – you still have the Fed pursuing a relatively stronger currency policy than the rest of the G8.  So, if anything, I think the pressure should be up, not down.  

 

UNLESS that 95 line does ultimately fail (as opposed to this being bullish consolidation at the prior breakout point), then I'd prefer to sell the UUP Jan $25 puts for $0.85 and buy the Sept $24 call...



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Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 

Since...



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Promotions

Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene

 

The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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